In Order to Minimize the Temptation for Managers to Act

question 46

Multiple Choice

In order to minimize the temptation for managers to act in their own self-interest, governance mechanisms exist for implementation consideration. Which of the following is not a primary means for monitoring managerial behavior?

• A)a board of directors that acts in the best interests of shareholders to create short-term value
• B)shareholder activism in which owners view themselves a shareowners
• C)a board of directors that acts in the best interests of shareholders to create long-term value
• D)managerial incentives to align management interests with those of the stockholders

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Definitions:

Money Market

A section of the financial market where short-term financial assets with high liquidity are traded.

Interest Rate

The amount charged by lenders as a percentage of the principal, or the amount earned on deposits over a specified period.

Equilibrium Value

The point at which the quantity of a good or service demanded equals the quantity supplied, resulting in market stability.

Opportunity Cost

Whatever must be given up to obtain some item.